Pre-action Protocol for Construction and Engineering Disputes
The clue for the Pre-action Protocol for Construction and Engineering Disputes is in the name.
This Protocol provides a format for exchanging information so both parties can accurately understand the dispute. It’s designed to ringfence conflicts and deal with them quickly, efficiently, and cost-effectively, avoiding the need to go to court.
Litigation isn’t off the table, but mediation and settlement are most definitely possibilities.
Understanding the Core Purpose of the Protocol
Objective and Benefits of the Pre-Action Protocol
The objective behind the Protocol is to encourage transparency through an exchange of information and promote negotiations. If lengthy and costly litigation can be avoided, it is in everyone’s best interest.
The process of nailing down the exact issues in contention also helps with early preparation if the case does end up in court.
Encouraging Early Exchange of Information
An early exchange of information is vital to narrowing down exactly what the dispute is about; it can eliminate irrelevant and unactionable elements and focus on the nub of the dispute.
Providing data also allows each party to understand the other’s position, which can have a surprisingly beneficial effect. This can lead to different forms of resolution, such as ADR (Alternative Dispute Resolution) or even settlement.
Setting Up a Structured Approach
There is a defined timeline between communications of 14 days. However, this may not be possible or practical depending on the complexity of the dispute.
The protocol timeline is pretty prescriptive. Any departure from it must result from negotiation and agreement between the parties and be reasonable.
Key Steps Involved in the Protocol Process
The protocol process is a legal procedure between the parties designed to elicit enough information to establish a case’s potential merits and investigate whether there are any other options for proceeding.
Actions: Letter of Claim
The Protocol starts with a Letter of Claim, which sets out the elements of the dispute.
Contents of the Letter of Claim
A Letter of Claim must fully identify all the parties to the dispute, including their names, business names, and addresses.
A simple and concise summary of the claim must be provided, including its foundation, whether contractual terms or statutory provisions. The relief claimed should follow this, along with any necessary breakdown of costings..
If the claimant intends to rely on experts, the letter should clearly identify them. Also, if the claimant wants the protocol referee procedure to apply, this should be clearly stated.
It’s common for the claimant to request that the recipient of the letter notify their insurers and provide confirmation of this.
Responding to the Letter of Claim
The defendant must acknowledge the Letter of Claim in writing within 14 days. The acknowledgement letter should confirm (if requested by the claimant) that the defendant has notified their insurers, although they don’t have to disclose their identity.
The defendant must issue a formal Letter of Response within 28 days of the letter of claim. If there’s no response, then the Protocol effectively ends, and the claimant can go ahead with legal proceedings. The defendant who does not respond in the protocol may suffer costs consequences even if they later successfully defend the claim.
Letter of Response Requirements
There’s an overarching requirement that a Letter of Response is proportional.
A Letter of Response should state which (if any) claims are accepted and for any rejected, the basis for this. The letter can also set out a counterclaim. If experts are relied on, then the letter must identify them.
If a counterclaim is included, the claimant then has 21 days to provide a written response.
Engaging in Pre-Action Meetings
Pre-action meetings take place after the letter of response if there is no counterclaim.
The Protocol requires a pre-action meeting to occur within 21 days following the end of the exchange of letters at whatever point that may be.
Conducting the Pre-Action Meeting
There is no pre-determined format for a meeting; it can be virtual or in person, and it can include mediation. However, the Protocol does set out who should be present at the meeting.
The idea of the meeting is to get to the bottom of the actual heads of dispute and work out how to find a resolution without going to court. Mediation could be the next step.
A pre-action meeting may also make it quite clear that a settlement isn’t going to happen.
Consequently, the meeting also acts as an opportunity to set out how the claim will be managed in the light of the Civil Procedure Rules 1.1, which state that it must be just and at a proportionate cost.
The framework of the claim can be outlined, including disclosure of documents, areas where experts might be required, and how to manage the twin challenges of delay and costs.
Understanding Confidentiality in Discussions
The Protocol states that everything said at a pre-action meeting is ‘without prejudice’, meaning the content of the negotiations and any attempts to settle the dispute cannot be evidenced in any subsequent court proceedings.
Potential Challenges and Non-Compliance Risks
Challenges to the pre-action protocol process include a failure to engage, a lapse in the requisite timelines, and procedural disputes. If both parties have previously agreed to this, a Protocol Referee can help manage these issues.
Handling Non-Compliance Issues
Suppose one of the parties to the Protocol doesn’t comply or there’s no agreement to a different timeframe (the standard timelines can be varied by mutual consent). In that case, the other parties may proceed to litigation, as effectively the process has failed.
Time Limitations and Legal Considerations
Failure to comply with the timeline of the Protocol without any alternative agreement can be unreasonable behaviour.
Unreasonable behaviour is relevant to the court’s perspective if that’s where the case ends up. Failure to comply with a Protocol Referee’s recommendations has a similar effect.
The Protocol is not legally binding per se. However, the court can sanction parties who don’t cooperate by making an adverse costs order even if that party ultimately succeeds in its substantive claim.
Alternative Dispute Resolution Options
Alternative Dispute Resolution consists of several options that avoid going to court. These include mediation, adjudication, and arbitration. Some of these can produce a binding decision that both parties must abide by.
If you wish to adjudicate, the protocol does not apply.
Introducing the Protocol Referee Procedure
The second edition of the Protocol introduced the Protocol Referee Procedure, which can be used if both parties have previously agreed to it.
Either party can apply for the appointment of a Protocol Referee, usually a barrister or solicitor with construction law experience. The application is made toTeCSA (Technology and Construction Solicitors’ Association).
The Protocol Referee can give directions for the management of the Protocol; these recommendations may steer the parties and carry weight in later court proceedings if one of the parties has acted unreasonably.
Recap of the Protocol’s Structure and Intent
The Pre-action Protocol for Construction and Engineering Disputes was revised in 2016. Significant reforms updated the process based on the experiences of previous users to keep procedures flexible and straightforward.
The Protocol isn’t a rehearsal of the evidence and arguments that may be relied on in court but a ‘light touch’ consideration of the issues at the heart of a dispute, opening the door to other forms of resolution and settlement.
Frequently Asked Questions
Does the Pre-action protocol for construction and engineering disputes apply to adjudication?
The Pre-action protocol for construction and engineering disputes does not apply to adjudication or the enforcement of an adjudicator’s decision..
What Are the Pre-Action Protocols?
Pre-action protocols are guidelines for different types of civil disputes. Claimants must follow them if they intend to start legal proceedings later.
The protocols were developed to promote the exchange of information and transparency about the dispute, hopefully leading to a faster, more cost-effective resolution away from the court, including settlement.
Pre-Action Protocols Facilitate Resolution Before Litigation
The Pre-Action Protocol for Construction and Engineering Disputes is part of a raft of protocols that aim to direct disagreements that may lead to litigation down a different road. The intention is to use a structured and swift approach to resolve disputes before they become entrenched. The Protocol opens the door for other forms of resolution like arbitration, mediation, and ideally, settlement.
Disclosure, transparency, and cooperation are at the heart of this process, with a defined framework and the option of a protocol referee. If matters deteriorate and end up in court, the Protocol will have assisted in the case preparation.
If you are involved in a construction or engineering dispute or have received a Letter of Claim, contact Helix Law. We offer professional advice throughout the pre-action process, including representing you at a pre-action meeting, at ADR, or in court.
